Daily Management Review

GE changes the personnel management system


General Electric is reviewing its approach to evaluation and remuneration of staff. For decades, GE had defined an ideal employee as one who fights product defects and does not admit uncertainty. Now, however, the company’s executives argue that the best performers are those who are willing to take risks, test new ideas together with customers, and even make mistakes.

The.Comedian via flickr
The.Comedian via flickr
Leaders say that long-term efforts to re-build GE an in innovative structure require a more flexible workforce that can develop products faster and cheaper. These changes are of great importance for GE, which corporate culture is based on the "Six Sigma" - a production system, involving detailed planning, says Janice Semper, director of personnel at GE.

By the end of this month, top managers have to decide whether the annual evaluation ratings should abandon evaluation of staff by five categories, from "model employee" to "does not satisfy the requirements." In addition, the company is thinking to abandon the old practice of annual promotion. Instead, it is proposed to increase wages, as well as to grant managers with a right to motivate employees in other ways, such as extra free time. According to Semper, GE plans to begin testing a variety of payment schemes later this year.

The annual evaluation of staff performance in GE is a series of self-assessments, formal reviews and ratings, exhibited by managers and approved superiors. These procedures may take up to five months. GE introduces a short summary of the annual performance, and also increases number of intermediate efficiency checks by managers. The old evaluation system will soon go into the past. The idea is to help employees to improve performance faster, and to switch to something else if their work came to a standstill.

Most of approximately 200,000 full-time GE employees will now be able to give and receive feedback via PD@GE mobile application. Thousands of employees are already testing the annual evaluation system without the rating.

Managers are recommended to assess employees according to their understanding of customer needs, and speed with which they check their assumptions about future products. The most important issue, according to Semper, is to reward employees for a "habit of asking questions, not for the rightness".

Employees must use the mobile application to send messages to each other and management. Critical notes should be accompanied with a headline "consider" and appreciations are titled "proceed". However, many workers, as shown by internal polls, are afraid to be criticized by superiors. "If you send a "consider" message to your boss or your boss's boss, it is unclear where it will end," - explains Matthew Morrison, a product manager of GE.

Top GE executives say they are trying to change internal processes so that employees have learned new behaviors, be it assessment of an officer or testing prototypes of products with customers. "The biggest problem is to get rid of old habits and get new," - says Semper. 

source: wsj.com